GST Bill: Revenue neutral rate is the key

New Delhi: A higher revenue neutral rate under the proposed GST law will lead to leakages, compliance issues, West Bengal finance minister Amit Mitra said. “What is interesting to us is we have to watch it carefully. If the revenue neutral rate is too high there will be leakages, there will be lower compliance ... GST’s whole effort is to make it transparent and simple the tax,” he said.

On asked about the status of Trinamul on the proposed Goods and Services Tax (GST), Mitra said: “TMC’s position is that we in principle agree, in practice we have many issues for which we have written to the finance minister, one at a time.”

“So like this, there are many issues, on any question on GST, in-principle we agree. And some of them have been met some of them will have to be met. For example revenue neutral rate, we don’t know what the revenue neutral rate or tax will be after GST. For 26 or 27 per cent rate of GST, there will be lot of leakages. So that’s another in practice question, in principle we support,” he added.

He said the West Bengal government is among the few participants in the country who has supported the proposed GST with clarity. “I have been on the empowered committee of the finance ministers (on GST). Almost all states supported West Bengal’s position, because we agree in-principle but in practice we have to be in the act of federalism. Mamata Banerjee has repeatedly said there has to be consistency in federalism,” Mitra said.

He said TMC will continue to raise the issue of revenue neutrality so that there are no leakage issues. On asked about Congress’ approach on GST, he said, “Now the revenue neutrality issue we have raised, we will continue to raise so that there is no leakage. I have nothing to do with what Congress is saying.”

Mitra said no revenue neutral rate has yet been agreed to or given to the empowered committee of finance ministers, adding that the call has to be taken by the panel. He also said the National Institute of Public Finance & Policy has given a revenue neutral rate and probably submitted to the government. “The National Institute of Public Finance & Policy has given a revenue neutral rate. We at empowered committee ourselves to do study...The estimates have to be accurate. So now they (NIPFP) are finishing the study and probably has been given to the government, it has not been shared with the empowered committee.”

Mitra said West Bengal’s position on GST is very clear and it wants an effective and practical GST regime. “We need a consensus of states, and that is what we have got so far. I do not want to consider what the Congress or non -Congress or NDA whatever (saying). I can talk only about Trinamool, I can only talk about Bengal.

“Our position is very clear. We will want a GST, since we have supported the manifesto, that is effective, that is practical, that will increase the GDP of the country and most importantly, small and medium enterprises must benefit from this process,” he said.